As Explosive Growth of ETFs Continues, Differentiation is Key

Explore how asset managers are expanding their ETF offerings in a rapidly growing market, using innovative strategies and adaptability to market trends to entice investors.

In a down year for U.S.-listed ETF asset gathering, the category has still seen close to $230 billion in investor inflows (compared to approximately $310 billion at the same time last year), a clear sign of the industry’s continued growth and maturation.

Much like the cyclical nature of markets, ETF flows can be cyclical as well. For example, hedged or buffered strategies attracted a great deal of investor interest in 2022, but the strong equity markets of the first half of this year have caused many to turn their attention back to various growth-focused approaches, particularly in the active ETF category. Several big-name asset managers, who had not previously emphasized ETFs, have spent much of the past year or more building out their product lineups, as well as their brands in the ETF arena.

As competition heats up, it is more essential than ever that firms looking to bring new ETF approaches to market have a clear understanding of the competitive landscape they face and shifting industry dynamics that could present unexpected headwinds (or tailwinds).

Beyond league tables, fact sheets, and flow data, what are advisors saying? What categories are showing the early signs of exponential growth or, conversely, a rush of investors toward the exits? What “next big thing” quickly turned into “the last big flop”? In short, what context can a team with deep relationships and decades of subject matter expertise bring? Whether a new idea is likely to find itself in the ongoing asset gathering discussion or whether it might be one that will take more education and be more of a “slow burn” in terms of gathering investors and market acceptance.

The team at Exchange Traded Concepts is a leader not only in providing its ETF-in-a-Box solutions, simplifying the ETF launch process to save sponsors money and time, but it is also one of the most experienced ETF teams in any corner of the business. Those entering the ETF space should not expect the rising tide of industry inflows to lift all boats, but with the right guides, new entrants can make sure their offerings standout for the right reasons in a crowded ocean of ETF options.

If you'd like to work with a partner that knows how to navigate the ETF landscape, contact us today.